16.05.2024

Poor start for Wacker Neuson

German telehandler manufacturer Wacker Neuson has reported a poor start to the year in terms of revenues and profits.

Total revenues for the company fell 11.1 percent to €593.1 million with declines in all three regions in which the company operates.
Europe €459.3 million -9%
Americas €120.4 million -16%
Asia Pacific €13.4 million -35%
Total €593.1 million -11.1%

Compact equipment - which includes telehandlers - performed better than most with sales of €370.9 million, down 11 percent, while Light equipment declined 19 percent to €110.4 million.

Profit

The company saw pre-tax profits nosedive to €32 million, a 62 percent fall on the same quarter last year. However, it needs to be pointed out that the first quarter of 2023 included a one-off profit of €15.5 million for the sale of an unused property. Take that out of the comparative and the decline was 54 percent.

Net debt increased 56 percent to €402 million mostly to fund working capital and inventory.

Full year forecast
The company is maintaining its full revenue forecasts at €2.4 to €2.6 billion compared to €2.65 billion in 2023.

Chief executive Karl Tragl said: “All regions were affected by economic slowdown, with a noticeable slowdown in growth observed in all submarkets. However, positive demand impulses were observed in some countries such as Austria. Revenue in the Americas region fell by 15.6 percent with the main reason for this being the continued high dealer inventory levels. The Asia-Pacific region also declined by 35 percent. In contrast to these developments, the growth in agricultural machinery was slightly positive rising 3.3 percent.”

“After a very successful previous year, the 2024 financial year has begun with the expected challenges. The cyclical nature of the business is no surprise to us - we have already begun to adapt our structures to the lower market demand. We expect to increase revenue and profitability from quarter to quarter. We pay close attention to our annual targets and confirm them. Strategy 2030 keeps us on course in the long term and secures our track record.”

Vertikal Comment

These figures are not great and in terms of revenues is pretty much in line with the other manufacturer results we have seen. The surprise with Wacker though is the sharp drop in pre-tax profit, while others have seen an improvement despite lower sales. Debt also appears to be spiralling and has almost doubled and its not clear why.

The company is in a good place as long as it is careful on what costs it slashes. Given its position in the market it might be better served doing the opposite and investing in building its brand and moving into markets where it currently has a weak or no presence - there are quite a few of them. It could also benefit from broadening its product range, adding slight larger telehandlers for example.

The company has excellent, first class products, but appears on the sluggish side when it comes to sales and marketing. Having said that selling €2.6 billion worth of relatively small equipment and machines is nothing to be sniffy about.